Editorials

Nissan's leaders will be put to test

Nissan Motor Co.’s appointment of 53-year-old Makoto Uchida as its new president and chief executive officer comes at a critical juncture for the automaker, whose brand has been severely damaged over the past year by the arrest of former Chairman Carlos Ghosn over suspected financial misconduct and the recent resignation of Hiroto Saikawa over questions concerning his executive pay.

On the agenda will be rebuilding the automaker’s poor sales in the North American and European markets, reversing its sharply declining profits and reviewing its tense relationship with its top shareholder, Renault SA of France. But the most urgent challenge of Nissan’s new leadership will be to restore the public trust tarnished over the exit in disgrace of two top executives and enable the firm to start investing in technologies crucial to the future of the auto industry.

There was speculation that to emphasize its departure from the regime led by Ghosn, who reigned over the automaker for two decades before his exit last year, Nissan would possibly select new top management from outside the firm. The eventual decision to choose Uchida, who ran the automaker’s China operation, and Ashwani Gupta as chief operating officer is believed to have been made to prioritize stability and balance in the alliance among Nissan, Renault and Mitsubishi Motors Corp. Gupta serves as chief operating officer of Mitsubishi Motors and has previous experience working at Renault.

Uchida was chosen by a Nissan committee comprising the six outside members of its board of directors, which was created by in-house governance reform following the scandal involving Ghosn, who many said wielded too much power at the helm. The committee reportedly whittled down its choices down from an initial list of some 100 candidates, including top executives in other companies. The chair of the committee said Uchida, who joined Nissan in 2003 after working for a major Japanese general trading house, was chosen because he attaches importance to the alliance with Renault.

Tensions over Nissan’s alliance with Renault came to the fore following the arrest and departure nearly a year ago of Ghosn, who had been sent by the French automaker to take charge of Nissan’s turnaround 20 years ago and later also took the helm of Renault. The current alliance — in which Renault holds 43 percent of Nissan while Nissan owns 15 percent of Renault shares, without voting rights — is lopsided given the performance of the two automakers. Reviewing the relationship with Renault remains a long-term challenge for Nissan and its new leaders going forward.

A more immediate task will be rebuilding sales in the North American and European markets, where the strategy under Ghosn’s leadership to pursue market share through discount sales damaged the Nissan brand. Due also to its sluggish performance in the domestic market, Nissan’s consolidated operating profit in the April-June quarter plummeted 98.5 percent from a year ago. The company has announced more than 10,000 job cuts to streamline its worldwide operations.

Meanwhile, China is the only major overseas market where Nissan continues to perform well. Uchida’s expertise in China — which the automaker views as a key market — and his rich overseas experience are deemed to be a reason behind his choice as new president.

Ghosn was arrested last November and later indicted on charges that he underreported his executive pay by ¥9 billion over eight years, transferred some ¥1.8 billion in private investment losses to the automaker and misappropriated hundreds of millions of yen in company money for personal use — accusations that he denies and for which he awaits trial. Following the ouster of the charismatic leader, Nissan laid the blame on its internal power structure that placed too much power in Ghosn’s hands.

Saikawa took charge by pledging to forge a departure from the Ghosn regime, but he came under criticism for staying on as Nissan’s chief since he, as a close aide to Ghosn, played a key role in the regime as co-CEO from 2016 and CEO and president from 2017. He was effectively forced to resign in September following the revelation that he had received excess compensation in 2013 via stock appreciation rights, in which the firm’s directors receive a bonus if its share prices perform above a target — although he denied deliberate wrongdoing and offered to return the pay.

There are views that the new top executives at Nissan were chosen to ensure a collective leadership that would avoid a repetition of the problems under Ghosn’s reign. The automaker is believed to have preferred not to rock the boat by inviting a powerful leader from outside its ranks. There is concern that the choice lacks a fresh and strong message that Nissan has indeed bid farewell to the Ghosn era. The leadership of the new team at Nissan will be put to test going forward.

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